Health fund rebates are complex but having an understanding is important to maximise your income and minimise patient out-of-pocket fees where possible. Let’s have a look at how health fund rebates work.
Medicare
First things first. The most poorly understood facet of private health insurance is that Medicare makes a significant contribution to health insurance rebate. In fact, Medicare sets the minimum rebate health fund must pay. For anaesthetics, the minimum rebate per unit is $21.80 as of 01 July 2024. Medicare actually pays 75% of this, and the health fund must pay the remaining 25%.
Health Fund “Schemes”
Health funds will have their own rebate schemes that increases the rebates paid and entice doctors to minimise any out-of-pocket costs (or “gaps”). Once you sign on to their scheme, the fund will pay a higher unit rate, so long as you limit your gap to a predetermined maximum.
For example, BUPA, Medibank Private, HCF and the AHSA (“member owned”) funds will all pay $35-$38 per unit (including the Medicare component), well above the minimum $21.80. You can charge a gap on top of this amount, but it can be no more than $500 per “episode of care”.
For example, let’s say you provide anaesthetic care that attracts 10 units with one of the health funds listed above, which equates to $350. This will be paid directly to you by the health fund, including the Medicare component. You could also charge the patient a gap of up to $500, making your final fee up to $850.
You can also charge above $850 with all these health funds. Let’s say you charge $1000 instead. You will be billing outside of the scheme rules, so the patient will need to pay the entire $1000 to you. Once issued a receipt, they can take it to their health fund and Medicare for their rebates. Their rebate will fall to $21.80 per unit, 75% of which is paid by Medicare, and their gap will increase to $712.
Therefore, with these funds, you can effectively opt in and out of the scheme with each patient.
Funds with a choice of schemes
Some funds give you the option to choose a particular scheme.
BUPA and HCF have a choice between a no-gap and gap provider scheme. If you are happy to no-gap all patients, they will pay you about $1 more per unit, however you are then locked in to no-gapping every patient.
NIB have two schemes that are very different to all other funds.
- Medigap, in which they pay around $38 per unit, however this falls to the Medicare rate if you charge any gap. Therefore, you can effectively opt in and out of the scheme with each patient, however their gaps will be significantly higher than if they were with the other major funds.
- Gapsure, in which they pay $43 per unit, and you may charge a maximum $500 gap for cases where the “initiation of anaesthesia” item number is worth 5 or more units, but you must no-gap cases where the “initiation of anaesthesia” item number is worth 3 or 4 units. If you participate in this scheme, you cannot opt in and out of the scheme with each patient – you must adhere to the $500 gap and no-gap requirements.
For all of these funds you can only choose one scheme, however you are free to change schemes at any time through re-registration with the fund.
Regional Health Funds
There are a few small regional health funds do not have limits on gaps. They do however pay a lower rebate. These are:
- Hunter Health Insurance – 150% of MBS rate on anaesthetic item numbers starting with a 2, and 120% on all other item numbers (such as anaesthetic consult item numbers).
- Mildura Health Fund – 125% on all MBS item numbers
- Latrobe Health Fund – 125% on all MBS item numbers
Rebates for Intensive Care Services
Health fund rebates for ICU item numbers are approximately 115% to 120% of the MBS fee. The rules mentioned above in relation to $500 gaps or unlimited gaps also apply. Note that only the NIB Medigap scheme is available to ICU Specialists
Summarising how Health fund rebates work
Medicare sets minimum rebates for private health care and pays 75% of it. Most funds will pay you or the patient a higher rebate if you limit your gaps as per each fund’s scheme rules. It pays to have a good understanding of these rules and how health fund rebates work for both you and your patient’s financial wellbeing. If you are still unsure about billing, we suggest reading How Billing works in Private Practice next.